News

By Rich Pollack

As town commissioners struggle to restructure water and sewer charges, one thing is certain — most customers will soon be paying more for a gallon of water when they turn on the faucet or flush the toilet.
But there is a silver lining: As water rates go up, residents will likely see a small decrease in the town’s property taxes.
While commissioners have spent weeks discussing a consultant’s proposal to adjust the way the town determines how much water users pay — and have yet to reach agreement — there is consensus on making the town’s utilities cover their costs.
Like most municipalities, Highland Beach has separate funds — called enterprise funds — for water and sewer. Unlike other communities, however, the town uses property tax dollars to cover the debt rung up during water and sewer projects.
Under the proposal from consulting firm Raftelis — and at the urging of the town — about one-third of the annual $1.4 million cost of debt service would be shifted in the next fiscal year to the enterprise funds and away from the town’s general fund, which is supported by tax dollars. The remainder would be shifted to the enterprise funds over the next four years.
“The commission has made a commitment that the enterprise funds for water and sewer should be independent and entirely supported by the utility rates,” Town Manager Marshall Labadie said. “For it to be independent, we have to raise revenue to cover costs.”
He pointed out that moving the debt from past utility projects, which now stands at about $11.4 million, will benefit taxpayers, especially those with larger homes.
“The rate increase will be slightly countered by a tax decrease,” Labadie said.
During a recent meeting, commissioners learned that the owner of a home with a taxable value of $250,000 would save about $59 a year in property taxes over a five-year period.
In addition to moving the debt services to the enterprise funds, the town plans to raise utility rates to cover operational and other costs.
Because the current rate structure does not generate enough revenue to cover the full cost of water and sewer operations, the town has had to dip into reserves in each of the enterprise funds.
During the current fiscal year, $570,000 is expected to be taken from the water enterprise fund to cover operations and $735,000 from the sewer enterprise fund. That leaves the water fund with $3.2 million and the sewer fund with $1.5 million.
Raising water and sewer rates will also help the utilities cover the cost of routine replacement and repair and help pay for potential capital projects.
As the town looks to the future, it anticipates having to repair or replace some of the aging sewer lines and is waiting for an engineering study to estimate the cost. How much is needed could affect how the town designs its rate structure.
As commissioners continue to review the water and sewer rates, which they do every five years, they will consider changes to flat “ready to serve” fees that all users pay, as well as charges for usage.
On the wastewater side, users currently pay a flat “ready to serve” fee with no charge for usage. In its study, Raftelis proposed increasing the flat fee and adding a fee for usage.
On the water rate side, the consultants recommended raising the “ready to serve” fee slightly and making adjustments to a tiered system based on usage.
While town leaders search for a rate structure that is fair to residents of condominium and multifamily buildings — as well as those living in single-family homes — they’ll be researching rate structures of other towns, getting more detailed costs of the sanitary sewer pipe improvement project and studying the feasibility of transferring money in the general fund reserves to the enterprise funds.
In addition, they’ll explore spreading expected increased costs over longer than just five years and consider ways to educate utility customers on ways to improve water conservation, which is encouraged by the South Florida Water Management District.
“There’s a lot to be done,” Mayor Doug Hillman said.